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Sustainability A New Focus Among Elite Companies

Jayson Derrick
  • January 19th, 14:30
  • Last Updated: January 19th, 18:25
  • Asset manager BlackRock announced a new focus on sustainable investing.
  • Days later, tech giant Microsoft pledged to become carbon negative in 2030.
  • Climate change remains highly political and divisive mostly along political lines.

If future generations are asked to pinpoint a time when the corporate universe took climate change seriously, it would likely be this week. Within the span of a few days, the world’s largest investment firm and one of the world’s most valuable companies each announced new sustainability goals.

BlackRock: ‘Fundamental Reshaping Of Finance’

BlackRock, the world’s investment management company with around $7 trillion in assets, said in a public letter this week that climate change is a “defining factor in companies’ long-term prospects.” 

BlackRock CEO Larry Fink penned the letter and suggested a “fundamental reshaping of finance” is underway. Climate change can and will impact long-term viability and investors need to adjust accordingly.

Encouragingly, he wrote that sustainability can exist hand-in-hand with economic gains. Fink believes he can play a role in both by selling sustainable investment options void of “dirty” companies. BlackRock’s ultimate goal is to create a new sustainable fund that will ultimately be its “flagship” offering.

“We want to make sustainable investing more accessible to all investors and lower the hurdles for those who want to act,” Fink said in the letter.

Microsoft: Carbon Negative In 2030

Microsoft, one of the very few companies in the world worth at least $1 trillion, announced Thursday a bold plan to become carbon negative by 2030. Twenty years later, the tech giant said it can remove from the environment all of the carbon it emitted since it was founded in 1975.

To help the company achieve its goals, Microsoft will invest $1 billion in a new climate innovation fund to help finance companies engaged in carbon reduction, capture, and removal technologies.

Not Everyone Is On Board

Larry Fink is “making a mistake” with his new sustainability goals, Point Bridge Capital CEO Hal Lambert said during a CNBC interview Thursday morning. According to Lambert, Fink disclosed two “big red flags” in a lengthy interview with CNBC’s Andrew Ross Sorkin.

First, Fink made it clear he was “emotional” in writing and explaining the new sustainability goals, according to Lambert. This trait is not consistent with what an investment manager should show.

Second, Fink acknowledged he won’t be fulfilling a fiduciary duty to make every attempt to maximize investment returns.

“Those are really troubling signs from a company that is now managing trillions of dollars for investors,” he said.

BlackRock’s new objectives may also extend beyond simply divesting away from fracking or coal companies. In fact, it could be viewed as an “attack” on companies of all sizes to change their internal operations and how they conduct their business or risk losing investment dollars from BlackRock.

About the author

Jayson Derrick
Jayson Derrick
Jayson Derrick has been writing professionally about stocks since 2011. He is particularly interested in alternative investments, hedge funds, and activist investing. He is a big fan of NHL hockey and lives in Montreal, Canada with his wife and four year old daughter.

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